I like to use a simple formula called the Absorption Rate to give a realistic estimate to my clients who are selling their home. Its a great tool that relates supply and demand in the housing market, and can be used for individual neighborhoods, specific price points, or even to evaluate a specific agent’s marketing efforts.
In order to calculate the Real Estate Absorption rate, only three paramaters are needed:
- The total number of active listings
- The number of homes that has sold
- The time period that the number of homes has sold over.
First calculate the average number of sales per month:
Number of sales per month = (Number of Homes sold over specific) / (time period)
Then calculate the absorption rate
Absorption rate = (Total number of active listings) / (Number of sales per month)
Here’s an example using made up numbers:
Number of Sold Homes = 33,163
Number of Active Homes = 14,156
So using the above numbers and formula you get:
33,163/10 = 3316.3
14,156/3316.3=4.268Absorption rate = 4.27 months to sell all the houses currently in the inventory in this made up market.
Remember, the Absorption rate does not account for new houses being listed on the market, nor does it take into account Withdrawn or Expired listings either.
The current absorption rate for SHANNON LAKE is 5 months.
Are you interested to find out what the absorption rate is in your area?
Contact me today.
I am the GUY that will make a difference!
I specialize in selling homes in the in the Okanagan Valley including Westbank, West Kelowna, Peachland with a focus on Rose Valley, Lakeview Heights, West Kelowna Estates and Shannon Lake.
Karen Guy, REALTOR
Coldwell Banker Horizon Realty
C 250.878.3605 O 250.768.8001